ISTANBUL (Reuters) - After a year of sanctions and saber-rattling over Iran's nuclear program, negotiators from Tehran and six world powers finally resumed talks and found at least enough common ground to agree to meet again next month.

With threats of war hanging over an already unsettled Middle East, U.S. and other Western diplomats welcomed their Iranian counterparts willingness in Istanbul on Saturday to discuss their nuclear activities - something they had refused since early last year.

But though they will meet again, in Baghdad on May 23, they remained poles apart. Iran called for a lifting of sanctions and recognition its uranium enrichment is for purely peaceful ends. The United States demanded urgent action to prove the Islamic Republic is not seeking the potential nuclear arsenal which Washington and ally Israel threaten to eliminate by force.

"While the atmosphere today was positive and good enough to merit a second round, we continue to stress ... that there is urgency for concrete progress and that the window for a diplomatic resolution is closing," said a senior U.S. official.

Over the past year, Israeli talk of "pre-emptive" strikes if Iran does not stop working on some aspects of nuclear technology have raised fears of war - and oil prices - especially since estimates of how much longer Tehran might need to build an atomic device, should it wish, have shortened to a year or two.

A resumption of dialogue may help dampen anxieties, although hawkish voices in Israel and Western states have long questioned Tehran's good faith and accuse it of using talks to buy time for its nuclear scientists - some of whom have been killed in what Iran says is a covert campaign by Israeli and Western agencies.

Publicly, negotiators on all sides emphasize the positive.

"We expect that subsequent meetings will lead to concrete steps towards a comprehensive negotiated solution which restores international confidence in the exclusively peaceful nature of the Iranian nuclear program," said Catherine Ashton, the EU foreign policy chief who leads negotiations for the six powers.